On one of the podcasts an investor had over a hundred houses and went bankrupt.

Maybe the trend in flipping, with all the noobs out there going bankrupt, is to find their half finished homes and buy them for pennies on the dollar.Much like failed rental investors there must be scores of them out there.

Legal fees should be part of the judgement but I guess I am worried about these people figuring out a way to avoid paying by going bankrupt or something and me being out more money for legal costs. 

I say sell now; take your losses or go bankrupt.

If you do a little research you will find that several past "gurus" went through bankrupt after their "system" stopped selling (I will find an article I read about this).

Can't remember if it was 3, 6, or 9 months.So that will contribute to more zombies in our bankrupt state.

The reason why I ask is because someone who I look up to has recently went bankrupt after a their partner went through a divorce.

Makes sense to have some sort of cushion, however if you think that a storm is going to bankrupt you, then I think you need a new insurance company. ($1,000 deductible being standard)I'm not saying don't have something set aside I just feel that if in your scenario you have a good tenant for 3 solid years and out of that $12,240 ($340 a month for 36 months) you use say $2,240 your account will have $10,000 in it.

The downside is companies go bankrupt all the time, but real estate is not likely to just go away.

I understand what you are saying and the numbers do appreciate and if you can accept that if your numbers bottom out your bankrupt then go ahead.